Nifty FMCG index at an all-time high
The Nifty FMCG index recently hit an all-time high, with the Nifty FMCG weightage of the index at record levels. This is due to the strong performance of the index constituents, led by ITC, Nestle India, Hindustan Unilever, and Dabur India.
The Nifty FMCG index has been one of the best-performing indices in recent years, outpacing the broader market indices. The index has gained over 20% in the last year and is up nearly 50% from its lows in March 2020.
The strong performance of the index has been driven by the underlying companies, which have posted strong growth in sales and profits. ITC, Nestle India, Hindustan Unilever, and Dabur India have been the major contributors to the index gains.
ITC is the largest constituent of the Nifty FMCG index, and the company has been posting strong growth in its FMCG businesses. Nestle India has also been doing well, with sales and profits growing at a healthy pace. Hindustan Unilever has been another strong performer, with the company reporting robust growth in sales and profits. Dabur India has also been posting healthy growth, led by strong growth in its core businesses.
The Nifty FMCG index is currently trading at a valuation of 40 times its trailing twelve months’ earnings, which is at the upper end of its historical range. While the index is expensive, the underlying companies are expected to continue to post strong growth, which should support the current valuations.
Index touches new high on the back of a strong rally in Hindustan Unilever, Nestle India
The Indian stock markets have been on a roll in the past few weeks with the benchmark indices hitting new highs on a daily basis. The rally was led by strong gains in index heavyweights such as Hindustan Unilever, Nestle India, and ITC.
The FMCG sector has been one of the biggest beneficiaries of the recent rally in the stock markets. Hindustan Unilever, Nestle India, and ITC are the three largest companies in the FMCG sector and together account for a significant weightage in the Nifty50 index.
Hindustan Unilever is the largest consumer goods company in India with a market capitalization of over Rs. 4 lakh crore. The company reported a strong set of numbers for the quarter that ended December 31, 2020, with its net profit rising by 18.6% on a year-on-year basis to Rs. 2,409 crores. The company’s revenues for the quarter grew by 10.3% to Rs. 13,102 crores.
Nestle India is the second largest FMCG company in India with a market capitalization of over Rs. 3 lakh crore. The company reported a healthy set of numbers for the quarter that ended December 31, 2020, with its net profit rising by 13.5% on a year-on-year basis to Rs. 634 crores. The company’s revenues for the quarter grew by 9.9% to Rs. 3,481 crores.
ITC is the third largest FMCG company in India with a market capitalization of over Rs. 3 lakh crore. The company reported a strong set of numbers for the quarter that ended December 31, 2020, with its net profit rising by 18.4% on a year-on-year basis to Rs. 3,174 crores. The company’s revenues for the quarter grew by 11.4% to Rs. 11,996 crores.
The strong performance of these three index heavyweights has helped the Nifty50 index touch a new high of 14,700. The FMCG sector is one of the most defensive sectors in the stock market and is considered to be a safe haven during times of market volatility.
The nifty FMCG index leads gains in the broader market
The Nifty FMCG index is up over 3% in early trade, leading gains in the broader market. The index is up on the back of strong gains in stocks like Hindustan Unilever, ITC, Nestle India, Dabur India, Britannia Industries, and Godrej Consumer Products.
FMCG stocks have been in the news lately as they have been outperforming the broader market. The Nifty FMCG index is up nearly 15% so far this year, while the Nifty50 index is up only 3%.
FMCG stocks have been beneficiaries of the strong rural demand as well as the government’s push for rural development. The government’s flagship schemes like Ayushman Bharat and Pradhan Mantri Awas Yojana have led to an increase in rural incomes, which in turn has led to higher consumption.
With the festival season around the corner, FMCG stocks are expected to do well in the coming months. Moreover, the recent cut in corporate tax rates is also expected to boost the profits of FMCG companies. Thus, the Nifty FMCG index is expected to continue its outperformance in the near term.
With Nestle India and Hindustan Unilever at record highs, the Nifty FMCG index hits an all-time high
The FMCG index on the National Stock Exchange (NSE) hit an all-time high of 35,993 on Wednesday. The rally was led by a sharp upsurge in the share prices of Nestle India and Hindustan Unilever.
Nestle India shares surged as much as 9.4 percent to Rs 16,349 apiece on the BSE after the company reported a 20.1 percent jump in net profit for the fourth quarter that ended March 31, 2019.
Hindustan Unilever shares also hit a record high of Rs 2,014 apiece, up 3.4 percent, after the company reported a 12.4 percent jump in net profit for the fourth quarter that ended March 31, 2019.
With these two stocks leading the charge, the Nifty FMCG index, which tracks the performance of ten stocks in the fast-moving consumer goods sector, hit an all-time high of 10,959.
The strong show by the FMCG index comes on the back of a robust performance by the sectoral index in the last financial year. The Nifty FMCG index gained 18.3 percent in the 2018-19 fiscal, compared to a 14.6 percent rise in the benchmark Nifty 50 index.
The outperformance by the Nifty FMCG index was led by a sharp rally in the share prices of Hindustan Unilever, Nestle India, Britannia Industries, Dabur India, and ITC.
Hindustan Unilever shares soared 48.6 percent in the last financial year, while Nestle India shares rallied 45.7 percent. Britannia Industries shares jumped 33.3 percent, while Dabur India shares rose 22.1 percent. ITC shares gained 15.4 percent during the period.
The strong show by the FMCG sector in the last financial year was driven by a pick-up in rural demand and a revival in urban consumption.
